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One of Three
UK LAND INVESTMENTS GROUP
Review from Business Opportunity Watch Rating Reviews,
October 2007 Issue 8
Editorial Postscript of 13th September 20083.
Events after October 2007
Extract from Business Opportunity Watch Reviews
October 2007 Issue 8
UK LAND INVESTMENTS
Berkeley Square House
UK Land Investments Group describes
its activities as follows: "We've developed a simple way for you to be able to buy prime undeveloped
land - which we believe has the potential to gain planning permission.
We've taken away all
of the complexity, by identifying prime pieces of undeveloped land, dividing it into building sized plots
and then offering these plots to individuals."
In its sales material, the company stresses
the importance to its customers of its highly experienced and well-qualified Strategic Land Buying
whose head is Brian Smith BA (Hons) MRTPI
(Strategic Land Director), and which also includes
Derek Lawrence BTP MRTPI MRICS
(Planning Director) and James Bromhead BSc (Hons) MRICS
However, despite the strength of this team, and despite the company's massive plot
sales (according to the company accounts for the 18 months ended 31 August 2006 the gross profit amounted
to £13.7 million) it appears that no plot sold by this company has ever achieved planning permission
... or, at least, this question simply remained unanswered in my following correspondence with the company
a few months ago: My Letter to UKLI
22nd July 2007
an online magazine called Business Opportunity Watch Monthly which analyses and assesses all manner of
"earnings opportunities" which are advertised to the public, such as business opportunities, non-FSA-regulated
investment opportunities, and opportunities for betting on the financial markets, on the horses etc.
A reader asked me about UKLI and in the course of my research I came across the letter dated 7th
November 2006 from Greg Mulholland MP
addressed to Nigel Walter
as the Managing Director
of your company, and I also saw Nigel Walter's posting on the forum at www.propertyscam.org dated 30th
November 2006 in which he starts off, "Dear readers, I am the Managing Director of UK Land Investments
However, I have checked records at Companies House for UKLI Limited (company number
04656772) and Nigel Walter is not shown as a director: the three current directors are shown as Lukbir
, Sudhir Singh Kundi
and Shaikh Kiayani Sameera
I had thought that the explanation might be that Nigel Walter
is the Managing Director of a holding
company, but this is not the case because all the shares in UKLI Limited are held by an individual - Baljinder
In the course of my research I noted that there appears to be a mistake in
the notice you carry at the foot of your web pages which says, "UK Land Investments is a trading name
for UKLI Limited
" and goes on to explain that your company is not regulated by the Financial Services
Authority and that it only "offers parcels of land for sale to individuals. UKLI Limited does
not have any role in pursuing planning permission, or managing the land once it has been sold and as such,
this is not to be viewed as a collective investment scheme
Surely, the trading name
of your company is UK Land Investments Group, not UK Land Investments?
I am delighted to hear
that Nigel Walter is "concerned with companies who are mis-selling or mis-leading with their marketing
" and I have a simple suggestion to put to you.
In making this suggestion, I wish
to clarify that there is no implication that your company's marketing material is mis-selling or misleading:
it is simply my suggestion for consumers to have the benefit of independent advice.
All the cases
I have come across where members of the public have been unhappy with their purchases of land plots (or
their purchases of buy-to-let apartments or their purchases of any other unregulated investments such
as wine or art) would be unlikely to have happened if consumers had been advised at the outset to obtain
their own independent valuation advice and their own independent legal advice.
It seems to me
that almost all the problems with unregulated investments flow quite simply from the fact that the marketing
material for these investments makes consumers think that they can rely on the vendors' valuations and
on the legal advice which comes either from the vendor or from solicitors recommended by the vendor.
Whilst it is obviously the case that professional people such as lawyers and valuers are required
by the rules of their professional bodies to put aside any conflicts of interest in carrying out their
duties, in my view a prospective purchaser puts himself in an inadvisable position if he uses, for example,
a firm of lawyers recommended by the vendor.
For example, it could be the case that this
firm of lawyers receives a lot of work from the vendor, or by virtue of being recommended by them anticipates
receiving a lot of work in the future, and so there is a conflict of interest which the purchaser has
to rely on being rigorously put aside by the solicitor in giving his advice.
I think that all
your company needs to do to instantly remove any doubts about "mis-selling or mis-leading
" is to
make it clear on both the Frequently Asked Questions
and the Investment Process
your website that prospective purchasers are advised to seek their own independent valuation advice and
their own independent legal advice.
I note that your Frequently Asked Questions page does not
raise the question of whether independent valuation advice would be advisable: and in response to the
question "Do I need a solicitor to purchase land?
" your answer is "No
to this question continues as follows: "You are of course welcome to use one if that gives you peace
of mind, however 85% of our clients use our free legal service, since we prepare the contracts and get
all the land searches and details when we purchase a site.
It is important that if you elect
to use a solicitor you find one who is familiar with dealing with land transactions - in our legal pack
we include a list of independent solicitors who we have found have the necessary experience in such transactions
to facilitate your transaction, although you are of course free to select anyone you wish.
there is anything in our agreement which is not clear, you are welcome to call our in-house legal team
who are happy to answer any questions you may have - if you are still not sure on any points then we would
recommend that you do consult an independent solicitor who has experience in dealing with land transactions
As I have stated above, I regard it as inadvisable for a purchaser to rely on your own company's
legal advice or on the advice of firms of solicitors recommended by yourselves. I am also astonished
by your implication that it is not easy to "find one who is familiar with dealing with land transactions
Did you check this with the Law Society? I thought that just about all general firms of solicitors
dealt with land transactions as their bread-and-butter business.
I also have a general question
about the purchase of land plots which I would be most grateful if you could answer.
you state, your company has nothing to do with obtaining planning permission, so this will be down to
the purchasers. In practice, how would this work if just one purchaser of a plot was prepared to
pay planning advisors to seek permission to develop his plot? Would he be likely to get planning
permission if he was seeking it for just one small part of a big field, for example? If not, then
would all the plot owners need to be acting in concert to seek planning permission?
they do all need to act together, then how would this one plot owner get in touch with all the others,
particularly if this happened years ahead when the company which had sold the plots was no longer in existence?
And what would happen if some of the plot owners did not want to develop their plots, or did
not want to pay their share of the fees or - if this happened many years from now - were simply untraceable?
Finally, so far as you know, have any of the land plots your company has sold received planning permission?
I have copied this email to Greg Mulholland MP
, and I look forward to your reply, which I
will likewise copy him in on.
By copy of this email to Greg Mulholland, I also wish to put to
him my suggestion as to how the government could easily resolve the concerns they have about the marketing
of non-FSA-regulated investments.
My suggestion is to introduce a legal requirement for
the marketing material for anything which describes itself as an investment and which is not FSA-regulated
to carry a Statutory Notice on its marketing material at the places where the marketing material refers
to investment potential and on the application form (similar to the one which is required by the Trading
Schemes Regulations for the marketing of multi-level schemes) to say something along the following lines:
This investment is not regulated by the Financial Services Authority.
As such, the government's advice is that purchasers should protect their own interests by appointing their
own independent valuer and their own independent legal advisor.
UK Land Investments Group
Reply dated 2nd August 2007
From Robin Barton Thank
you for your letter dated 22nd July 2007.
We respond as follows:
is part of a group of associated companies and Nigel Walter was Managing Director of a board heading up
this group of associated companies.
UKLI Limited is more commonly
known in the trade as UK Land Investments but the name UK Land Investments Group is indeed sometimes used.
We are committed to ensuring that our marketing material is neither mis-selling or
misleading and would welcome any suggestions you might have to ensure this remains the case. All
of our clients are actively advised to obtain independent legal advice and a form is required to be filled
out whereby they have to decide if they wish to appoint an independent legal advisor and requesting the
appropriate contact information. Due to the nature of the transaction, we advise solicitors who
have been used by clients in the past and therefore have the experience of our documentation, and thereby
saving the client time and money. We have dealt with a number of different solicitors and it is
our experience that many do not understand this type of transaction. We have no association with
any of the solicitors we recommend, normally they approach us to be placed on the panel, and clients are
free to use any solicitor they wish, there is no pressure at all to use any suggested solicitors.
We refute the assertion that our recommended solicitors would give less rigorous advice to a client and
the solicitors in question would also we are sure sternly resist any such accusation.
Our in-house legal team do not provide legal advice to clients, they merely assist
with the documentation. If advice is required on the specifics of the documentation which is outside
of this realm, a client is immediately advised to seek their own independent legal advice.
With regard to the suggestion that an independent valuation be carried out, we believe
this would be overly costly for a client due to its complicated nature, however, we would be more than
happy to discuss this in more detail with you.
With regard to
your questions concerning the model, we would suggest meeting up to discuss this in person due to the
large number of questions you have raised. A member of our Strategic Land department would be happy
to take you through the detail of the UK planning process.
your last point concerning the disclaimer, we have been attempting to work with the authorities to protect
consumers from rogue operators and have welcomed regulation to the industry and would be pleased to discuss
this with you further.
We have been working closely with
our PR agency to ensure that any reporting concerning UK Land Investments is accurate and that we are
given a chance to give our side of the story. The most effective method we have found is for the
journalist to come to our office in London and to discuss any questions they have face to face with members
of the team. If you wish to take up this opportunity please let us know when you are available and
we will make the necessary arrangements. We look forward to hearing from you.
My reply to UKLI
3rd August 2007
Thank you for your invitation to come to your London office to discuss the mechanics
of your company's land investment offer.
However, I prefer to have written information from companies,
because that way there is less likelihood of misunderstanding.
My method of operation is that
I focus on the information which is provided to consumers at the time they make their purchasing decision.
Normally, this information is provided in a sales letter and/or in a brochure or - in the case of an offer
marketed over the internet - on a web site.
In my view, everything consumers need to know
should be provided to them as part of the offer, so that they can make an informed purchasing decision.
In the case of an investment decision, I would have thought that this information needed to include
full details about the mechanics of selling the plot or obtaining planning permission.
Your web page headed "Land Valuation" states: "Potential Uplift in Land Value: Strategic land has
long been a source for creating wealth. Through UK Land Investments' knowledge and expertise you
can benefit from the increasing value of strategic land in the UK. (1) Buy plots from UK Land
Investments (2) 5 - 7 years potential re-zoning." This web page includes a diagram showing
the purchase price of a plot at £25,000 increasing to £68,000 with "3 - 7 years potential
So presumably the reason why most people buy agricultural plots from your company
is because they hope to obtain planning permission.
However, it appears that they are not going
to get any help at all with this from your company because the following notice is given at the foot of
each page on your web site and also on your company's headed notepaper:
"UKLI Limited does
not have any role in pursuing planning permission, or managing the land once it has been sold and as such,
this is not to be viewed as a collective investment scheme."
So is this really a suitable
purchase for the average person if they are going to have to organise their own planning permission?
Moreover, I note that in your letter you say, "We have dealt with a number of different solicitors
and it is our experience that many do not understand this type of transaction". You also state
that, "With regard to the suggestion that an independent valuation be carried out, we believe this
would be overly costly for a client due to its complicated nature".
If many solicitors
do not understand the transaction and a valuer would find it complicated to do a valuation, the same question
arises again: is this really a suitable purchase for the average person?
Regarding your recommended
solicitors, I note that you now give contact details of one firm on your website.
the avoidance of doubt, I wish to clearly state that there is no suggestion that any firm recommended
by your company would give anything other than the highest level of independent advice.
to me, though, that it is usually both normal procedure and common sense for anyone thinking of buying
something not to use professional advisers who have had prior contact with the vendor, even if is only
- as you state on your website - that "We have briefed them on exactly how we work and what we offer
and thus they are suitably equipped to deal with client enquiries".
I would have thought
that the fresh view of lawyers and valuers who have never previously dealt with agricultural plots would
be particularly beneficial in the case of an investment whose value is not easily measured and the realisation
of which is unlikely to be simple should the consumer wish to sell it or obtain planning permission.
Thank you for taking the time to deal with my enquiries, and I look forward to hearing further from
Reply from UKLI Limited
15 August 2007
Thank you for your letter dated 3 August 2007.
We respond as follows:
UKLI Limited retains up to a third of the land on each site. This gives
UKLI an enduring stake in the site alongside its clients and promotes its retained land to be allocated
for development. This promotion is not for planning permission for the retained land which is a
step further which UKLI is not involved with. Once successfully allocated, land is typically worth
80% of the value it would achieve with outline planning permission.
property solicitor will of course understand the transaction but it will take time as they are unlikely
to have dealt with a specific transaction such as this, which would add to the cost to the client.
With regard to valuations, these are generally costly and it is up to the client if they wish to incur
this expense. We would assist with this in any way we could. Clients are encouraged to seek
professional advice and are free to do so if they wish. We do not believe there is any question
that this type of purchase is suitable for the average person.
mentioned previously, the most effective method for understanding the business model is to come to our
office in London and discuss any questions that you might have with members of the team. We would
be delighted for you to take up this opportunity and we will make the necessary arrangements.
I thanked the company for this information
and said that I would not be taking up their offer of a meeting for reasons already given.
this point, I had already decided to give this company's offer a rating of Zero because of the unresolved
concerns expressed in my letters to the company.
I then came across a further website - www.ukcapitalinvestments.com, which belongs to a company called
UK Capital Investments Group
, or UKCIG
. It does not appear to be a limited company,
although the website gives the Executive Team as Bally Chohan
(Chairman), Navaid Chaudhri
Sales Director), Rehan Khan
(Chief Operating Officer) and Brian Allen
(Global HR Director).
The website is registered to UK Capital Investments Group at the Berkeley Square address, and
the administrative and technical contacts are given as Bally Chohan, also at Berkeley Square. However,
the head office is given as being in Dubai, which is no doubt why the company can give investment advice
(see the Private Equity page on the website) without being registered with the FSA.
another website, too, at www.uklii.com
. This website is also owned by UK Land Investments
Ltd, and once more the administrative and technical contacts are given as Bally Chohan, again all at the
Berkeley Square address.
However, although the company's heraldic logo is shown on the site,
nowhere does it refer to UK Land Investments Ltd: instead, all references are to UK Land Investments
. It is a mystery as to what "UK Land Investments International" is, or where it
is based. It does not appear to be a limited company.
At the foot of the home page it says,
"UK Land Investments International is solely for international clients based in the GCC, Middle East,
Canada and Asia. The products of UK Land Investments International are not to be marketed to persons
in the UK or the USA and as such does not fall under the jurisdiction of the FSA, OSC or the SEC
The website lists offices in U.A.E, Saudi Arabia, Hong Kong, India. Malaysia, Pakistan and Canada.
Business seems to be going well.
There's a projected luxury hotel and apartment development
in Dubai Marina
called Berkeley House
which is described as "sold
" on the website
at www.ukcapitalinvestments.com. .
And Arab News recently reported that "UK Land
Investment International, a major British retail land investment company, has appointed Fathi Taleb
Real Estate Est. as its local marketing agent in a contract that was signed in Jeddah last week
In addition to selling UK land plots to Saudis, it appears that the company also hopes to sell Saudi property
- whether to the Saudis or to the British is not stated - "with the expertise from the UK
A piece in the Guardian dated 22nd September 2006 headed "Indians plough cash into false hopes
of new homes on English green belt
" indicates that purchases of land plots several thousand miles
away and sight unseen may fail to meet expectations. The article reported an Indian yarn trader
who bought for £24,000 two plots in Kent in green belt which according to a Maidstone district council
spokesman was "an area liable to flood, it was highly unlikely any residential development could take
UK Land Investments Ltd seems to have had a few problems of its own. On 11
January 2007 its auditors Moore Stephens resigned and filed notice under s392 of the Companies Act.
Their letter says, "We are writing pursuant to section 394 companies Act 1985 to inform you of circumstances
connected with our ceasing to hold office which we consider should be brought to the attention of the
member and the creditors of the company".
The letter goes on to record the following:
"The duly appointed directors of the company appear to have no involvement in the running of the business.
Instead, the business is run by Robin Barton, Nigel Walter and Paul Charney, none
of whom has been formally appointed as a director. Neither the sole shareholder nor the de jure
or de facto directors have been prepared to address corporate governance issues with us
At 28 February 2006 the company had loaned £553,002 to Bally Chohan. As he was then a director
of the company, the loan was unlawful. In addition, since he is the sole shareholder of the company
the loan gives rise to a liability of the company to tax of £138,250 payable on 28 November 2006.
This tax has not been paid. Mr. Chohan resigned as a director on 24 April 2006. By 30 September
2006 the loan had risen to £957,732. We are unable to say whether the loan is recoverable."
The letter goes on to refer to a loan of £2.5 million to a loss-making subsidiary company
which in their view was "unlikely to be recoverable
", and loans of £3.2 million to other
companies or entities in the UK and overseas some of which were "entities whose ownership we were unable
to discover or confirm
" and "by 30 September 2006 this had increased to around £5.5 million.
We have not been provided with any evidence that the company has a commercial rationale for making these
As at 28 February 2006 £428,000 had been lent to a company owned by
Robin Barton which appears to be insolvent. By September 2006 this sum had increased to £923,277."
The auditor's letter goes on to record that, "We also noted that pursuant to legal obligations
the company has made a provision for £500,000 plus VAT for costs relating to obtaining planning
permission on each site from which plots have been sold.
As at 28 February 2006 the total
provision stood at £7.6 million but the company does not have the funds to incur this expenditure.
Furthermore, £3.245 million received from customers in respect of a site at Borehamwood is refundable
plus 15% if the company does not obtain planning permission within five years and for which full provision
has been made in the financial statements."
Finally, the auditors stated that they had been
informed of various transactions and proposed transactions with "UKLI India, Saudi British
Property Investments Limited and other entities whose ownership is unknown to us, Connaught Asset
Management Limited, a company owned by Nigel Walter, and Bally Chohan whose commercial rationale is
unclear and which do not appear to be in the interests of the company."
On Company House
records, for various directorships other than UKLI, Bally Chohan
's occupation is described as "Director",
's is "Business Professional" and Robin Barton
's is "Solicitor". For various
Secretarial appointments, Paul Charney gives his occupation as "Lawyer" or "Solicitor".
seem that at least some of UKLI's problems were sorted, because the new auditors Hillier Hopkins LLP of
Watford signed off the 2006 accounts with a statement headed "Emphasis of Matter - Going Concern
which record their unqualified opinion. However, they refer to the company's loan facility of £4,991,000
at the balance sheet date, repayable on demand, having been extended to 28 February 2008 which was less
than 12 months from the date of the approval of the financial statements and because of this and other
matters referred to in the notes to the accounts they record "the existence of a material uncertainty
which may cast significant doubt about the company's ability to continue as a going concern
BOW Notice: A zero score or a low score means that in our opinion the business model
or the investment model has flaws and/or that we have found inadequate evidence to back up claims about
earnings, sales, profits etc. It doesn't mean this evidence does not exist and it doesn't mean that the
opportunity is a scam and it doesn't mean that the promoters are unprofessional or dishonest. Questions
arising are normally contained within the body of the review, and readers who are interested should contact
the company with these questions and/or questions of their own.
The above correspondence with Robin Barton of UKLI was copied to Greg
Mulholland M.P. at the time it was sent to Robin Barton in July/August 2007. It seemed that Greg Mulholland
ought to be informed that the person he had met and corresponded with as Managing Director of UKLI - according
to Nigel Walter's letter of 13 November 2006 to Greg, they discussed "the deliberate miss-selling
(mis-spelling?) of some businesses in the so called land banking industry" - was not the managing
director of the company and was not a statutory director of the company at all.
The other person
present at these discussions according to Nigel Walter was "Brian". Presumably, that would be
the Brian Smith BA (Hons) MRTPI, who according to the UKLI website "is a professional Town Planner
with 25 years experience". According to the website of Regents Land at www.regentsland.com, he
previously worked for several local authority planning departments and also worked for Laing Homes and
Wimpey and he "was a member of the Department of Trade & Industry's Task Force on sustainable
transport futures". Brian was head of UKLI's "Strategic Land Buying Team" which included
Derek Lawrence BTP MRTPI MRICS and James Bromhead BSc (Hons) MRICS.
The only reply from Greg
was a brief acknowledgment at the end of August saying that he would consider how he "could take
this up". So, after further research, the above review was published a month later in October
3. EVENTS AFTER OCTOBER 2007
Subsequent events since
preparation of the above Business Opportunity Watch Rating Review in October 2007 are as follows:
On 18th March 2008 Baljinder Chohan was disqualified as a director for four years following
an investigation by Companies Investigation Branch of the Insolvency Service.
He was the founding
director and controlling shareholder of UK Property Fund Managers Ltd, a company set up to raise up to
£1 billion equity for a property fund. The proposal document which was sent to potential investors
was specifically arranged to be compliant with Shariah law.
The Court found that the proposal
document contained a number of lies and misleading statements, such as figures for the value of projects
which had been falsely-inflated on Mr. Chohan's instructions; a false claim that there was an impending
partnership between UKPFM and an NHS Trust; false names included in the list of executive team members;
and lies in Mr. Chohan's own CV about holding an MBA from Henley Management College and having been a
Communications Director at British Airways.
The court gave Baljinder Chohan leave to continue
as a director of UK Land Investments Ltd (UKLI). He doesn't seem to have appreciated the offer, though,
because he resigned as a director of UKLI on 12th May 2008.
No doubt his resignation was influenced
by the fact that on 1st April 2008 the FSA presented a petition to freeze the assets of UKLI and to wind
the company up on the basis that it was operating illegally. The petition was granted and UKLI is now
Interestingly, although Baljinder Chohan was registered as a director of UKLI
at Companies House, the two men who according to the letter dated 11th January 2007 from auditors Moore
Stephens really ran the company - Robin "please-come-to-our-office-to-discuss-what-we-do-because-it's-so-complicated-that-we-don't-explain-it-on-the-website"
Barton and Nigel "I-call-myself-Managing-Director-but-I'm-not-really" Walter - are not
registered with Companies House as directors of UKLI.
Both men are, however, registered with
Companies House as directors of a number of other companies.
According to the information which Business Opportunity Watch obtained from Companies House, Nigel
Walter's directorships include Connaught Asset Management Limited and Connaught Administration Services
Limited, both in the business of "other financial intermediation" and Connaught Land
Limited whose business is "development and sell real estate".
Management offers investment in undeveloped land the way it should be done - as an investment fund "for
the sophisticated investor market" through FSA-regulated Capita (Capita Financial Managers Limited).
Investment can only be made through an independent financial advisor (IFA) and institutions.
Connaught's Diversified Strategic Land Managed Fund, Series 3 "will invest in a range of strategic
land sites within the UK, with a very low to medium risk profile". Greenfield land is given under
the heading of "Medium Risk" where it says there is "50% expectation of project".
No doubt " the sophisticated investor market" has the experience and resources to form
their own independent assessment as to whether the "50% expectation" is realistic.
There's also a limited liability partnership called Connaught Consultancy Services LLP which offers
"specialist planning services for strategic land sites".
Nigel Walter was also
the founding director of Regents Land Limited, and he remained its sole director until 27th February 2007,
when he was replaced by Daniyal Abdulkader LLB LLM, "Dan Kader" (who apparently now poses as
a property developer and resides, so we have been informed as at December 2010 , at a Chorleywood property
which cost nearly £1.5 million in 2008).
According to the "Statement of Proposals
Pursuant to Paragraph 49 of Schedule B1 of the Insolvency Act 1986" dated 9th June 2008 from the
Administrators of UKLI, four of the sites where plots were sold by UKLI are in fact owned by Regents Land
and were sold by UKLI under an agency agreement "the nature of which is currently being investigated
by the Administrators".
This is very odd, because according to its website, Regents
Land "specialise in providing strategic land investments to institutional and specialist investors"
i.e. they say that they do not sell land directly to members of the public. So how come they did?
Regents Land says that it offers a four-phase promotion process : "Phase 1, Identification
of suitable sites, Phase 2, Acquiring the site, Phase 3, Promotion to the local authority and Phase 4,
Allocation and disposal". This would bring it straight into the same problem which the FSA says
that UKLI had, i.e. of marketing an unauthorised collective investment scheme, which is a criminal offence.
Unlike the UKLI scheme - see analysis below - the Regents Land scheme does seem to be caught as a
collective investment scheme because it offers a complete purchase-to-sale management package and therefore
fulfils the essential requirement of a Collective Investment Scheme under section 235 of the Financial
Services and Markets Act 2000, which is that the participants in the scheme do not have day-to-day control
over the management of the property.
According to the FAQ on the website of www.uklandinvestments.com
- now used by the Administrators to communicate information to plot holders - "Regents Land is
technically still operational" but its website at www.regentsland.com has disappeared, it hasn't
got any staff and it's not selling any further plots. Sadly, it's difficult for plot holders to contact
anyone at the company because the only person left is the sole director Daniyal Abdulkader LLB LLM who,
according to change of address details filed at Companies House, used to live in London but recently moved
to Dubai Marina.
Bally Chohan is the sole shareholder in Regents Land. Regents Land was not subject
to the FSA petition (which only applies to UKLI Limited) and is not in Administration.
Robin Barton is a director of Chorus Direct Limited, a company which ran call centre
activities for UKLI and which is wholly owned by UKLI Limited. Chorus Direct Ltd owes £2.3 million
Robin Barton is also a director of UK Healthcare Group Limited and its subsidiaries
Belford Healthcare Limited, Seabrook House Limited and Forge House Services Limited. The business of all
four companies is given on Company House records as "Other human health activities".
Robin Barton has never, however, held any shares in these companies: they are wholly controlled by Bally
Chohan, who owns the one and only issued share in UK Healthcare Group Limited, which in turn owns all
the shares in its subsidiaries.
UK Healthcare Group owes £1.4 million to UKLI.
addition to living in a make-believe world as regards his claims investigated by the court in connection
with UK Property Fund Managers Ltd, Bally Chohan has held directorships in 17 dissolved companies, of
which he set up and dissolved 10 within 2 years. He came and went and came back again as a director of
UKLI Limited, which he wholly owns, being first appointed a director on 5th February 2003, resigning on
26th April 2006 and being re-appointed on 5th March 2007 before finally resigning again on 12th May 2008.
There's also a mysterious pattern of musical chairs (or "pass the donkey" perhaps?) with
the directorships of St. James's Land Limited, again wholly owned by Bally Chohan. In less than
5 years, there has been a succession of 10 directors who have resigned. One of them was Bally Chohan himself,
who was appointed on 3rd December 2003 and resigned on 19th November 2004. Another director, Sameera Shaikh,
has come and gone twice. A further director, Lukhbir Bains, was appointed on 15th January 2007 and resigned
on 27th February 2008, only to be re-appointed on 30th May 2008 as the sole current director.
Like Regents Land, St. James Land was not subject to the FSA petition and is not in Administration. The
company is still operational, although most of the content has been removed from three of its websites
(at www.stjamesland.co.uk and www.stjamesland.com - both owned by Bally Chohan - and www.stjamessland.com
- owned by UKLI).
Previously, the St. James Land websites proudly claimed that the company was
"founded in response to a number of unscrupulous companies who were buying and promoting worthless
tracts of agricultural land with no real development potential, that broke all the planning rules".
Well, fancy that!
However, Business Opportunity Watch found two more websites at www.sjl.co.za
and www.stjamesland.co.za which still appear to be going strong marketing UK agricultural plots to residents
of South Africa. The company is planning to exhibit at HomeMakers Expo in Durban at (Stand H18 to H21)
from 2nd to 5th October 2008. The company previously offered land for sale at New Addington, Kent and
is now offering land at Datchet, Royal Borough of Windsor and Maidenhead (next to a picture of Windsor
Castle on the website). The guide price is £19,500 for a 250 square metre plot.
handed over £69 million to UKLI for similar plots in the vain hope that they would obtain planning
permission. They are likely to get back as little as 2.5p in the £.
With typical plot
prices ranging from £12,000 to £18,500, that means that roughly 5,000 investors are likely
to have lost nearly all their money.
It would be easy to put all the blame for this on the shoulders
of Bally Chohan, Robin Barton and Nigel Walter. But they aren't the real culprits.
The real culprits
are the Financial Services Authority.
The Financial Services Authority have a statutory duty
under the Financial Services and Markets Act 2000 to protect consumers and in this case they failed miserably
- for more than two years.
The FSA visited UKLI in late 2005 and early 2006 and concluded that
its operations constituted an unauthorised Collective Investment Scheme, and that it was therefore trading
If a collective investment scheme falls within the definition in section 235 of the
Financial Services and Markets Act 2000 then it falls to be regulated by the Financial Services Authority
and there are restrictions on marketing such schemes to the public, even where the marketing is carried
out by someone who is authorised by the FSA.
Marketing unauthorised collective investment schemes
to the public is a criminal offence.
Surprisingly, instead of taking action for a criminal prosecution
against the company or the directors or petitioning for the company to be wound up straight away, the
FSA allowed the company time to come up with a proposed alteration to its business, which the company
did quite quickly. Under this alteration (according to the Administrator's Paragraph 49 Statement) "UKLI
retained a proportion of the land on each site and sought to procure re-zoning of only its retained land,
rather than for the whole site. However, the assertion by the FSA was that in practice plots were still
marketed to individuals under the same basis, in that the Company would continue to seek planning permission
for the entire site, and considered that the Company was therefore still operating illegally as a CIS".
So what did the FSA do then? Nothing. For more than two years there is no evidence that they took
any further action until April Fool's Day this year when they presented a winding-up petition to the High
Court. The petition sought the winding-up on two grounds - that "the Company was unable to pay
its debts and that it was 'just and equitable' that it should be wound up as a matter of public interest".
On 4th June 2008 the FSA published a Press Release containing the following quote from Jonathan Phelan,
head of Retail Enforcement at the FSA:
"The FSA will not hesitate to
pursue companies like UKLI, which offer unauthorised and illegal services that put such investments at
unnecessary risk. We will continue to do everything possible to keep people safe from illegal schemes
that deny them their right to complain and get compensation when things go wrong.
action against UKLI should serve as a warning to other companies that might be breaking the law in this
This Press Release contains misleading and false information - starting
with the title "FSA seeks to close down UK's largest illegal 'landbanking' scheme"
since the FSA omits to mention that the scheme only became so large because they had known about it for
two years and done nothing.
The Press Release goes on to say, "UKLI's business was illegal
because it operated as a CIS and should have been authorised by the FSA". This implies that it
is a fact that UKLI operated as a CIS but it isn't a fact at all. It has not been subject to a court determination
and it is merely the FSA's opinion ... and it's difficult to taken even this opinion seriously since the
FSA didn't do anything about it for over two years.
Jonathan Phelan's quotes are ridiculous:
he says that the FSA "will not hesitate" when they hesitated for more than two years.
He also says that the FSA "will continue to do everything possible to keep people safe from illegal
schemes" when they did nothing for two years in the case of UKLI. Other companies "breaking
the law" will presumably receive the message that they have two years following an FSA visit
to carry on with what they are doing.
Interestingly, a very different light is thrown onto the
course of events by Bally Chohan's Statement of Affairs which he signed as a Statement of Truth on 4th
August 2008 and which is lodged at Companies House, which reads as follows:
- "UKLI was advised by counsel in 2005 and 2006 that its trading and
operation as a non FSA registered entity was lawful.
- In 2005 counsel advised that UKLI
was not operating a collective investment scheme.
- In early 2006 leading counsel advised
UKLI to change its business model and confirmed that the new model was not a collective investment scheme.
2005/2006 the DTI undertook a detailed investigation of UKLI and were clearly satisfied as to the legality
of its trading and operations.
- In early 2006 UKLI approached the FSA. The FSA took the
view that the pre March 2006 plot purchasers were within non-regulated collective investment schemes and
so should be transferred to a regulated entity. UKLI was advised that this did not mean offering plot
purchasers a refund. In any event the FSA and UKLI entered into correspondence on this issue."
Both the written advice from counsel and the correspondence between the FSA and UKLI are company property
and will now be in the hands of the administrators. In the interests of the creditors, shouldn't this
evidence be made available to them?
In the absence of seeing any of this paperwork, let's see
what the legislation says.
Thankfully, the legislation is short, self-contained and easy to
follow. Here it is:
Financial Services and Markets Act 2000
(1) In this Part "collective investment scheme"
means any arrangements with respect to property of any description, including money, the purpose or effect
of which is to enable persons taking part in the arrangements (whether by becoming owners of the property
or any part of it or otherwise) to participate in or receive profits or income arising from the acquisition,
holding, management or disposal of the property or sums paid out of such profits or income.
(2) The arrangements must be such that the persons who are to participate ("participants") do
not have day-to-day control over the management of the property, whether or not they have the right to
be consulted or to give directions.
(3) The arrangements must also have either or both of the
following characteristic -
(a) the contributions of the participants and the
profits or income out of which payments are to be made to them are pooled;
(b) the property
is managed as a whole by or on behalf of the operator of the scheme.
arrangements provide for such pooling as is mentioned in subsection (3)(a) in relation to separate parts
of the property, the arrangements are not to be regarded as constituting a single collective investment
scheme unless the participants are entitled to exchange rights in one part for rights in another.
(5) The Treasury may by order provide that arrangements do not amount to a collective investment
(a) in specified circumstances; or
(b) if the arrangements fall within
a specified category of arrangement.
Although this legislation seems quite simple
in principle, it's also a specialist area and there's little case law for guidance. The following analysis
should therefore be taken only as setting out the basics.
You can see that the one key feature
which a collective investment scheme must have in order to be caught by section 235 and require regulation
by the FSA is that the people in the scheme must "not have day-to-day control over the management
of the property".
With a piece of land which has been bought for the purpose of realising
its potential for development, there's not really any "day-to-day control over the management"
to do apart from trying to get planning permission on it.
But UKLI specifically said at the
foot of each page on its website that it did not do this - it said that it only "offers parcels of
land for sale to individuals. UKLI Limited does not have any role in pursuing planning permission,
or managing the land once it has been sold and as such, this is not to be viewed as a collective investment
And it's highly unlikely that in practice UKLI did anything at all about
pursuing planning permission, even for the land on each site which they retained for themselves, let alone
for the land owned by the plot holders. There are two reasons for this:
Firstly because UKLI
made big, quick, up-front profits from selling the plots, it would not make sense to divert their top
planning personnel away from the very profitable core business of acquiring sites for division and resale
as plots into the longer-term, much more difficult arena of trying to obtain planning permission. An acre
equates to slightly more than 4000 square metres. The company sold plots of 400 square metres for £18,500.
So that means that even if the company paid as much as £4,000 for an acre of agricultural land,
that's only £1 per square metre, and they sold it pro-rata for 46 times as much profit. So even
if the company retained as much as a third of a plot (note that the marketing material uses that famous
marketing phrase "up to" a third) they would still walk away with 22 times as much profit
(or, if you are into percentages, 2200% profit).
Secondly, it made no sense to try to get planning
permission because most of their plots had faint hope of ever getting it.
Moreover, the participants
in the UKLI scheme did have day-to-day control over the management of their property because each
plot was registered in their own names and it was up to them to look after it or not as they wished, and
to apply for planning permission for it or not, as they wished. Once the plots had been sold, UKLI had
nothing more to do with them.
Of course, the reason why these people bought their plots in the
first place was because UKLI said that they carefully selected their plots for their likelihood to get
planning permission. And the public believed them because they had a Strategic Planning Team of people
with the best qualifications who were members of honourable professional bodies such as the Royal Institute
of Chartered Surveyors and the Royal Town Planning Institute; and because UKLI said, under the heading
"What makes you so sure you will get planning" :
" ... it
is in our interests not to invest in land that we do not believe has a very good chance of being re-zoned
(or allocated) as we retain up to a third of a site for our own benefit. We also reserve £500,000
per site to promote our land with a Local Authority for potential re-zoning for residential development
- no other company in this industry makes such a commitment".
members of the public bought their plots in the belief that they would be easily able to get planning
permission on their own land when UKLI obtained planning permission on the adjoining land which UKLI retained.
But this does not make it a Collective Investment Scheme because UKLI only promised to seek planning
permission on their own land.
Even if the UKLI scheme were caught under this "day-to-day
control over the management" requirement, it would also need to be caught by a second requirement
before it could be classed as an unauthorised collective investment scheme.
This second requirement
is - unsurprisingly for a collective investment scheme - that it must be "collective".
Under subsection (3) above, a scheme is regarded as collective if either:
collectively owned i.e. the contributions of the participants and the profits or income arising are pooled
(e.g. a scheme where each participant owns a share in the whole); and/or
(b) it's collectively
managed i.e. all the parts of the property are managed by the operator of the scheme or his agents (e.g.
a scheme where each participant retains title to his own discrete part of the whole property, and the
whole property is managed by the scheme operator).
There was no pooling of the contributions
or of the profits or income because each plot holder retained complete title over his own plot. So (a)
above is out.
Also, (b) above is out because UKLI did not "manage the property ... as
a whole" either on a site-by-site basis or on the basis of the sites collectively: on the contrary,
after the plots had been sold, UKLI washed its hands of them.
Whoever came up with this scheme
is very clever - albeit sadly lacking in morals if the person knew or suspected that it was going to be
used to sell land at gross overvalue to unsophisticated investors.
The scheme appears to be bullet-proof
from the collective investment scheme angle ... unless the FSA has got some damning evidence that they
have been sitting on for some inexplicable reason such as surreptitious photographs of Robin Barton and
Nigel Walter down on the plots with their daisy-dibbers and lawnmowers, for example.
itself appears to have given clearance to the UKLI scheme. In the Guidance to the Full FSA Handbook published
on their website at http://fsahandbook.info/FSA/html/handbook/PERG/11/3, Question 21 and its answer read
Q21. I run a business which arranges for individual plots of land to
be sold to potential investors and, whilst I refer to the possibility of obtaining planning permission
as a way of increasing the value of the land, I don't, nor does anyone connected to me, have a role in
pursuing any such permission nor any other control over the land as a whole. Do I need to be authorised?
No. If all of the participants have control over the obtaining of planning permission relevant
to their individual plots of land the arrangements will not be a collective investment scheme. Arranging
for investment in plots of land by itself is not a regulated activity as plots of land are not of themselves
Overall, Business Opportunity Watch's conclusion is that,
despite its bombastic comments, the FSA knew that its claim that UKLI was operating an unauthorised collective
investment scheme was spurious. That would explain why this supposed defender of the public waited, cowering
in the shadows, while UKLI sucked in money from more and more unsuspecting investors ... until the FSA
got wind of the fact that a major credit about to petition the court for the company to be wound up for
inability to pay its debts.
Then, the FSA suddenly changed from a shrinking coward into a galloping
charger off on one of their favourite pursuits - a nice bit of spin. The petition was now risk-free because
it could be on the grounds of the company's inability to pay its debts as well as on the grounds of public
interest, and they banged in their petition shortly ahead of a major creditor.
The FSA's doubt
that it has evidence that the company was operating a collective investment scheme is shown in the Administrator's
letter to the creditors of 10 July 2008. This letter asks for plot owners to let the Administrator have
any marketing material they have retained, such as DVDs, pamphlets or emails, presumably to see if there's
anything to show that UKLI said that they would seek planning permission for the plots.
that the FSA is asking for such evidence is curious, for several reasons.
it's curious because the way in which a scheme is marketed does not seem to have any effect on whether
or not it's a Collective Investment Scheme. The legislation says, "..."collective investment
scheme" means any arrangements ... the purpose or effect of which is to enable persons taking part
in the arrangements ... to participate in or receive profits or income arising from the acquisition, holding,
management or disposal of the property ..." Claims or promises made in the marketing material
for any scheme do not "enable persons taking part in the arrangements ... to participate in or
receive profits ... etc". In the UKLI case, the only way in which people were enabled to take
part in the arrangements and participate in the profits was by entering into a contract for the purchase
Moreover, under section 2(5)(a) of the Law of Property (Miscellaneous Provisions) Act
1989), any contract over land other than short term leases has to be a written contract.
it can't be the case that UKLI made any mistake with their written documentation. Not only would they
have employed the best legal minds to draft it, but also - if they had made mistakes in drafting their
documentation - the FSA would have jumped on them long ago.
And, lastly, it's curious because
if misleading marketing was the evidence that the FSA needed to wind the company up then why didn't it
obtain this evidence itself in 2006 ... for example by the simple expedient of getting some of its members
of staff to pose as potential purchasers? Why wait until now, when they have to ask for the help of the
people who have lost substantial sums of money due to FSA incompetence and inertia?
Or why didn't
they ask the Advertising Standards Authority to adjudicate on some of the company's advertisements? Was
it because they didn't like the idea of another authority being able to act quickly when they didn't?
Or was it because they felt they had dug themselves into a hole by trotting out the collective investment
scheme argument for the other landbanking companies and they didn't think they could depart from it? Surely
Or why didn't they pass the matter to the Office of Fair Trading to threaten the company
with prosecution under the Misleading Advertisements Act, and require UKLI to add caveats to its marketing
material about the fact that no planning permission has ever been given for plots sold by any landbanking
company and so purchasers should obtain their own independent valuation advice before proceeding? It seems
to Business Opportunity Watch that it really would have been irrelevant whether or not a case under the
Misleading Advertisements Act would be likely to succeed if it came to court. The mere threat of having
such negative publicity would have had put a big spoke in the company's wheel - either it complied, or
it went to court.
Alternatively, the Office of Fair Trading might have thought that it was better
to pursue action under the The Stop Now Orders (E.C. Directive) Regulations 2001 which concern "injunctions
for the protection of consumers' interests". Under these Regulations, according to the Explanatory
Note, "where the relevant Court is satisfied that the trader has engaged in conduct which constitutes
a Community infringement or is likely to do so" the court may make an order for the trader to
stop the infringement or not to engage in the conduct which would constitute an infringement of any EC
Consumer Protection Directives covered by this legislation. These Directives include "Council
Directive 84/450/EEC of 10 September 1984 relating to the approximation of the laws, regulations and administrative
provisions of the Member States concerning misleading advertising".
Or, even more obviously,
why didn't the FSA grasp the nettle that a loophole existed in these very specific circumstances, and
simply ask the government to change the law, to say that any arrangement is always a collective investment
scheme if it involves acquiring land and dividing it up into (say) more than 10 parcels and marketing
it to the public on the basis of its potential increase in value? Surely just one clause added to section
235 of the Financial Services and Markets Act like this could have been done quickly, without needing
the involvement of management consultants and a public consultation?
Speaking of management consultants,
when schemes are allowed to continue and suck in millions there's a second disadvantage because when they
do go belly-up the amount of work that's needed to sort things out is so enormous that it's only the biggest
accountancy firms that can cope with it. This is unfortunate because normally the bulk of the work that's
required when a company is in administration or liquidation is ... administration i.e. routine clerical
Whereas in central London £15,000 to £25,000 is the typical salary range for
permanent administration jobs and £15 an hour is a typical hourly rate advertised on job sites such
as www.reed.co.uk, www.jobserve.com and www.totaljobs.com, the big accountancy firms charge more than
ten times as much as this. So in the case of UKLI the charge for "Assistants/Support staff"
is £126 if regional staff are used and £198 if London staff are used.
With an insolvent
company, these very high rates are effectively being paid by the creditors.
The economics of
running a big accountancy practice must have changed a lot since the editor of Business Opportunity Watch
was employed by a big four firm 15 years ago at a salary of £48,000 and an hourly charge out rate
of £120. It seems that today staff on a salary of half that amount are being charged out at a higher
rate. Overheads must have rocketed, obviously.
Looking again at the two-year period when no action
was being taken to stop UKLI, coincidentally there was at the same time a big consultation involving considerable
expense of public money under the auspices of HM Treasury. This was to deal with a couple of points of
narrow concern (there were only 16 respondents to the Consultation) regarding Collective Investment Schemes
at the instigation of some financial institutions. (Consultation on Amendments to the CIS Border for Property
Transactions of 1 February 2007 and Further Consultation of August 2007.)
were worried that the exemption from being classed as a Collective Investment Scheme might not apply to
certain of their activities involving the use of Special Purpose Vehicles and/or involving participants
who engaged in such arrangements several times over. When they expressed their concerns, the government
jumped in a big way, with not one but two consultations, involving a consideration of the possible solutions,
two drafts of a Statutory Instrument (because they didn't get it quite right the first time) and two Partial
Regulatory Impact Assessments. There was then a further amendment "to remove requirements that
the arrangements should always have met the terms of the exemption in order to benefit from it which were
deemed unduly burdensome" i.e. to effectively backdate the changes to make quite sure that those
involved in any of these arrangements need not lose any sleep over it. The necessary amendment to the
law was made and laid before Parliament on 24th June 2008 and came into force on 15th July 2008.
What a pity that not even a fraction of such effort was put into solving the UKLI problem.
a pity also that the Treasury seems to have taken no action on a letter they received from John Howard,
Chairman of the Financial Services Consumer Panel, on 29th March 2007. The Financial Services Consumer
Panel works "to ensure that the FSA regulates the financial services industry in the UK in the
interests of consumers". John Howard's letter was sent in response to this Consultation and he
said that the Panel had no objections to the proposals in the Consultation "as they appear to
relate to transactions at an industry level rather than impacting directly on consumers".
However, his letter went on to express concerns about "land banking schemes" and
he stated that "the Panel believes that a great deal could be done to protect consumers if the
relevant legislation and/or regulations were made flexible enough to deal with these schemes without hampering
legitimate commercial or social enterprise. ... the Panel has been advised of roughly three dozen schemes
that are being marketed or have recently been marketed, with a typical potential loss to consumers of
about £1mn from each although some schemes exceed this. Consumers do not, of course, have access
to the Financial Ombudsman Service or the Financial Services Compensation Scheme when investing in an
unauthorised scheme, so must bear losses personally".
John Howard's letter is published
on the website of the FSA Consumer Panel at www.fs-cp.org.uk.
It seems to have fallen on deaf ears.
To add insult to injury, according to the minutes
of the creditors meeting of 28th July, the FSA has now used the medium of the Administrator to ask the
creditors to "fund a court determination of whether or not UKLI had been operating a collective
investment scheme. Such a determination would enable land owners to return their land to UKLI and fall
to be unsecured creditors of UKLI".
Since the company does not have the necessary funds,
it looks as if there will never be a court determination ... unless the FSA does the decent thing and
funds the determination themselves.
The Administrators' Notice of Meeting of 10th June 2008 says
that their investigations are at an early stage but that the potential claims they "would give
consideration to" include "breach of fiduciary duty" by current or former directors
or shadow directors of the company.
What about investigating the breach
of duty by the FSA?
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